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UK Government Announces Review Into Product Recall System

LONDON, 16 March 2015 – The UK Government has announced a broad-ranging review of the system for conducting consumer product recalls in the UK. Against a background of increased enforcement activity internationally, this review signals a renewed commitment on the part of the UK government to improving consumer safety, which will see companies needing to increase their focus on their own compliance systems, or face potentially heavy fines and damaging publicity for failing to adhere to the rules.

The Consumer Affairs Minister Jo Swinson has launched the review, which will focus on how the Government can make enforcement of product safety rules more effective and improve consumer protection, particularly in the context of the recall of unsafe products.

The announcement of the review by the UK Government comes in the wake of a well-known domestic appliance manufacturer having been fined a significant penalty by a UK court for failing to promptly report a product safety risk to the authorities – one of the first times such a fine has been levied against a consumer product manufacturer anywhere in Europe.

This review is significant because:

Europe has the strictest product regulations in the world, but enforcement has often been patchy when it comes to consumer products.

This focus on improving the effectiveness of product safety rules, especially product recalls, shows that the authorities are now getting more serious about enforcing the robust system that currently exists.

International brand names understand the importance of complying with product safety regulations, including those requiring reports to be made to the authorities around Europe when unsafe products are identified. However, for many years, the risks of non-compliance have often been relatively low in Europe, due to the relatively low focus on enforcement in most EU countries

Based on the most recent experiences of Hogan Lovells’ International Product Safety practice, there has been a marked increase in enforcement activity by product safety authorities in many parts of the world. Current “hot spots” include the EU, parts of South America, UAE, Turkey and parts of Asia.

Analysis by Hogan Lovells into the number of dangerous products notified to the European authorities shows a marked rise in the number of reports made over the last three years.

Since 2011, there has been an increase of around 37% in the number of reports of consumer products posing a “serious risk” published by the European Commission, based on information provided to it by national authorities throughout the EU. In 2014, around 2,130 reports of product presenting “serious risks” to consumers were notified by European authorities and published by the European Commission.

The research has revealed that:

Toys: are the most common subjects of unsafe product reports, accounting for some 28% of all reports of “serious risk” in 2014. This is unsurprising, given the breadth of the market for toys, the high level of regulation of the product category in Europe, and the prevalence of low-cost, unbranded products in the European market.

The vast majority of reports of unsafe toys involved low cost products, carrying no brand or a little-known brand name, and often not sold through mainstream channels. It is notable that the proportion of toys amongst the reports of unsafe products is on the increase (last year up 27% on the previous year). This does not suggest that toys are becoming more dangerous – the contrary is likely to be the case. Rather, it reflects the increasing level of enforcement activity, and the more focused actions by authorities targeting areas of the toy sector.

Motor Vehicles: Current trends suggest that the number of safety reports involving motor vehicles is increasing significantly in Europe. This is unsurprising, especially in the wake of some highly-publicised safety issues involving the automotive industry internationally over the last year, including public allegations that companies were not sufficiently quick to report product defects to the relevant authorities.

Rod Freeman, a partner in Hogan Lovells' Product Safety and Liability Practice, said: “We are clearly seeing a marked increase in the number of recalls affecting consumer products. But this is not an indication that products are getting more dangerous or that consumers are being put to greater risks – the opposite is almost certainly the case. Rather, this shows that enforcement is increasing internationally, and companies are starting to respond to this by taking a global view of their product safety compliance issues, and more proactively acting to deal with issues as they arise.

“Hopefully, the outcome of this review will be a balanced and properly focused enforcement regime. It would be wrong to think that consumers are regularly placed at risk by purchasing products manufactured by established brand names. The evidence shows that the greatest risks come from low quality products made by companies that don’t have well-established brand names and good reputations to protect, and who flout product safety rules. Consumers will be best protected by enforcement activity that focuses on the true “rogues” operating at the fringes of consumer product markets, and a focus that promotes markets with a level rather than rewarding companies that undermine legitimate companies by cutting corners when it comes to compliance.”